Much of the commentary about Ben Wyatt’s first State Budget has (understandably) focused on the controversial new revenue measures — chiefly a royalty increase on gold miners and payroll tax slug on the largest employers — which represent broken promises.

But the foundation of the Budget’s credibility — and the course it charts back to surplus — is laid upon projected spending growth assumptions that I described in this newspaper the day after it was handed down as “heroic”.

To recap, spending growth in the public sector averaged 6 per cent a year for a decade but Wyatt’s fiscal blueprint assumes an average growth of just 1.9 per cent annually over the next four years.

Drill down, though, into the Government’s largest and biggest-spending department — Health — and the task looks even tougher.

Health spending is the millstone around the neck of every State and Territory treasurer in the country.

For a range of reasons — among them an ageing population, the cost of medical technology and consumer demand unconstrained by hip-pocket considerations — health budgets everywhere are growing more quickly than inflation.

Nowhere has this been more evident than in WA, where all of these factors are in play, and compounded by a sweet industrial-relations regime which has seen doctors and nurses working in the public health system here enjoy the best wages and conditions in the country.

The Budget papers nicely summarise most of the critical issues.

WA’s 22 per cent population increase over the past decade not only outstripped the national growth rate of 16 per cent, it also delivered an older community. The number of West Australians aged over 65 — a cohort whose demand for hospital services is self- evidently greater than the general population — grew 39 per cent.

One of the paradoxes of modern medicine is that we can now treat more chronic disease, which prolongs life expectancy. The flipside is that we are living with chronic disease for longer — which itself pushes up demand for hospital services.

According to Health, 45 per cent of preventable hospital admissions in WA last year were because of chronic conditions.

Despite the central focus of the Reid Review in 2004 — and years of conventional public health wisdom that prevention and early intervention (keeping people out of hospital) is better than trying to treat the symptoms of chronic disease in hospital — gains in this respect have been marginal at best.

WA’s doctor shortage is real, and it has an effect on hospital admissions. We have only 77 general practitioners per 100,000 West Australians, compared with the national average of 95 — and the gap is growing.

Canberra is not helping. Last year, per capita Pharmaceutical Benefit Scheme funding was $270 in WA compared with $332 nationally, and aged-care funding was $585 in WA compared with $663.

Further, the economic downturn — and premiums that continue to increase at two to four times the rate of inflation — has seen more West Australians junk their private health cover, instead rolling the dice that they will get superb treatment in the overhauled public health system.

These factors amount to something of a perfect storm. And soaring demand for public hospital services is underscored by the fact — despite waiting times that compare favourably with other States, and record levels of activity — the elective surgery wait list is at record, and growing, levels.

None of these trends are new, and nor is the inability of Health to live within its means.

Wyatt is not the first Treasurer to demand spending restraint from Health; yet history suggests Budget outcomes are rarely, if ever, met — with annual top-up funding worth tens to hundreds of millions of dollars a year a budgetary reality.

All of this explains why Health has grown from 24 per cent of total State Government spending a decade ago to 30 per cent today.

So how ambitious is Wyatt’s Health agenda? Well, for more than 15 years, annual spending growth in Health has averaged a tick over 8 per cent.

Wyatt’s Budget assumes spending will grow at an average of one per cent annually over the next four years. And spending is actually forecast to be cut in 2018-19 by 1.8 per cent, an outcome that is without modern precedent.

Such outcomes appear to this observer to be impossible. Interviewed yesterday, Wyatt conceded history was not on his side.

The West Australian's Group Business Editor Ben Harvey breaks down the McGowan Government's first Budget .. and it's not pretty.

The West Australian

The West Australian's Group Business Editor Ben Harvey breaks down the McGowan Government's first Budget .. and it's not pretty.

“It’s true that this has been going on a long time,” he said of Health overspends. “The actuals have continually come in X-hundred-million over budget.

“But the Health Minister (Roger Cook) understands the importance of living within our means and we have a Cabinet and an Economic Expenditure Review Committee determined to deliver.”

The unspoken implication is that Cook, who is the Deputy Premier, is on notice in a way that longstanding Barnett government health minister Kim Hames never was.

Former Barnett treasurer Christian Porter once famously declared to journalists in a budget lock up that “if a dollar isn’t nailed down, Kim Hames will spend it on health”, which was meant to be a compliment but ended up being an epitaph for his government’s budget management.

Asked why it would be different this time, Wyatt said that population growth — and thus demand pressure — had eased and maintaining the Government’s $1000-only-pay- rise policy would be critical.

But much is also expected of the Government’s sustainable health review, which is due to report by March, just in time for next year’s Budget deliberations.

The review is being sold as Reid for the new generation but, as that experience shows, review recommendations count for nothing unless there is political will to deliver. And that ultimately will be the McGowan Government’s test.